Malawi Economic Monitor, December 2019 : Strengthening Human Capital Through Nutrition
With Malawi’s economic growth recovering and single digit inflation, the Government has a keyopportunity to rein in fiscal deficits and reduce domestic debt. If it can better control domestic debt levels, the Government could increasingly move towa...
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| Format: | Report |
| Language: | English |
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World Bank, Lilongwe, Malawi
2019
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| Online Access: | http://documents.worldbank.org/curated/en/403401576093803229/Malawi-Economic-Monitor-Strengthening-Human-Capital-Through-Nutrition http://hdl.handle.net/10986/32890 |
| Summary: | With Malawi’s economic growth recovering
and single digit inflation, the Government has a
keyopportunity to rein in fiscal deficits and reduce
domestic debt. If it can better control domestic debt
levels, the Government could increasingly move towards
creating the conditions for the privatesector to increase
investment, which can drive growth and job creation. To
support this, the Government needs to develop a track record
of achieving sustainable fiscal deficits in order to contain
and reverse the escalating domestic debt burden, to contain
interest rates and avoidcrowding out private sector
investment, and to increase public investment. Malawi’s
economy is projected to grow by 4.4 percent in 2019, up from
3.5 percent in 2018. Agricultural activity rebounded in 2019
due to favorable weather conditions, which offset the
negative effects from Tropical Cyclone Idai in parts of the
southern region of the country. Crop production was
generally strong, particularly in the case of maize, with
production increasing by 25.7 percent. This supported
overall economic growth, despite a decline in tobacco
production. However, the ongoing political impasse, with
widescale demonstrations that have continued since May 2019,
has constrained business activity and increased uncertainty,
weighing on investment. The Government missed the revised
fiscal deficit target in FY2018/19. The fiscal deficit
increased to 6.5 percent of GDP, higher than the revised
target of 5.8 percent. The impact of election-related
expenses,increased interest payments and costs associated
with the disaster response pushed recurrentexpenditure
beyond targeted levels by 1 percent of GDP. This was
partially offset by under-execution of development
expenditure, which was not enough to keep the fiscal deficit
to 5.8 percent of GDP. Poor revenue performance, which was
lower by 0.5 percent of GDP, compounded the problem. |
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